China Buzz

The trading week started off with a whimper as China’s derivatives markets closed mixed to slightly higher. At the ZCE, contracts were down 15 to up 65 yuan/ton. May added 55 to finish at 11,820 yuan/ton. Volume for the day was just over 20,000 lots. At the CNCE E-Forward Market, prices fell 2 to 40 yuan/ton. The May contract closed at 12,055 yuan/ton. Volume for the day was more than 5,000 tons. Cash prices fared no better, closing unchanged to ever so slightly higher. Price strength continues to be noted in Hebei, Shandong and Henan. Mills are still buying but mainly hand to mouth. No real change to report with import prices. Indian styles have not been aggressively priced. Today’s reserve procurement totaled 24,800 tons, including 10,000 tons of Xinjiang cotton and 14,800 tons of inland cotton. As of March 9 cumulative 2008/09 reserve procurement reached 2,422,050 tons, 1,321,600 tons from Xinjiang and 1,100,450 tons from inland.

Bao Kexin, President of the Grain Reserves, has stated the agency is likely to miss targets for buying up to 6 million tons of soybeans and 40 million tons of corn. Similar to the ongoing purchasing program for cotton, the Grain Reserves has been actively buying domestic soybeans and corn in a bid to prop up farmers’ incomes—especially with spring planting season just around the corner.

In very late Asian trading, the yuan is unchanged against the dollar at 6.84.